This article considers the efficacy of the withering interest
forfeiture remedy under a joint operating agreement
("JOA") as a reaction to a party's unremedied default
and whether the interest sale option is a preferable remedy.
This article references the model form JOAs issued by the AIPN
(2012), the AMPLA (2011) and OGUK (2009).
Remedies for default
The default remedies under a JOA apply principally to the
failure of a party to pay when due its proportionate share of a
cash call or invoice request (depending on how the JOA deals with
demands by the operator for funding the costs of joint
operations).
The two essential components of the default remedies under the
JOA are that the default is made good by the non-defaulting parties
(so that the continuation of joint operations is not jeopardised)
and that the defaulting party will be required to make good the
default amount. Ultimately, this second component could result in
the loss by the defaulting party of
